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Usually if you have a Cable or Satellite box, you would hook up a Fiber Optic or Digital Coax cable from the Sat/Cable box to the Sony Receiver. Then for HD, an HDMI cable or componet cables from the Sat/Cable box to the TV

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Connect the Wii to your television. Then connect the variable audio output from the TV to the audio in on the monitor section of the receiver. Then use the TV/SAT input selection on the receiver and dolby prologic 2 as your sound mode.

Hook up Composite / Component Monitor Out wire from receiver to TV video input because receiver will not change analog input into HDMIYou need to connect receiver and TV through analog video terminals as above. Actually you are expecting that receiver will convert DVD player and Xbox analog video input into digital HDMI signal for TV and This is incorrect.

If you have two optical inputs and two equipment (PS3 and HDVD) then you shouldnt have a problem at all. Just make sure you change the mode of the receiver to TV/SAT when you want to use the HDDVD. Your problem may be the video out put.

If i was you i would do the following:

1. Get rid of all your optical cables as you won't need it.
2. If your receiver support HDMI then by default HDMI will send both video and digital sound.
3. Plug the HDMI of the PS3 to the HDMI input of the receiver, plug the HDMI of the HDDVD player into the HDMI 2 of the receiver and plug 1 HDMI cable from the receiver to the tv/monitor you have.

That is the best set up so when you play PS3 you select dvd/ld and when you watch hddvd you select tv/sat.

However having said all that the fact that you have dvd/ld suggests you actually don't have HDMI at all on the receiver(...i just checked the specs of the receiver). Which means you will need to have 2 hdmi inputs for your tv and you will need to have the 2 optical connections.